Case study: labour and social clauses

Sport shoes from top brands have become some of the hottest fashionable accessories, reaching prices once reserved to luxury Italian classic leather shoes. Most of those sport shoes are made in factories located in developing countries, in particular in Asia in countries like Cambodia, Vietnam, Indonesia or China. Working conditions in those factories have long raised concerns, with a series of reports by international NGOs about violence or use of children as young as 10.

This in turn has fuelled resentment about globalisation and the tendency toward a race to the bottom for labour standards in the world, together with the continuation of job losses in countries with higher standards. As a response, in the last 20 years there has been a myriad of initiatives (public, private or public-private) to push for the promotion of standards via existing or new instruments. The resulting picture is a long list of norms, codes, standards, or guidelines.

First, the International Labour Organisation has produced more than 180 conventions on labour standards since its creation in 1920. Of those, a dozen were singled out as core conventions by the ILO Declaration on Fundamental Principles and Rights at Work in 1998. They include such Conventions on:

freedom of association and the effective recognition of the right to collective bargaining;

the elimination of all forms of forced or compulsory labour;

the effective abolition of child labour; and

the elimination of discrimination in respect of employment and occupation.

But given difficulties to push states to make significant progress on those issues, and their unwillingness to resort to sanctions within the framework of the ILO (sanctions have been used only once against Myanmar in 2001), the focus has increasingly been to induce business to take action. From this perspective, a number of new international instruments have been developed.

Most of those instruments draw upon the ILO fundamental conventions, yet in different ways and scope. A first example is the UN Global Compact, an initiative that calls for companies to do business in a responsible manner by respecting a list of ten principles on human rights, labour, environment and anti-corruption. Four of those principles cover labour issues in sync with the four
domains covered by the ILO fundamental conventions. More than 12,000 firms worldwide have become signatories of the UN Global Compact, thus signalling their intentions to change corporate strategies. The extent to which this commitment has materialised remains unclear, however.

Another example of action by an international organisation is the Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinationals, last revised in 2011. They include a long section on Employment and Industrial Relations that also draws on the ILO core conventions.

Initiatives by non-governmental organisations include the global agreements developed by UNI Global Union, a union of unions in the service industry, with more than 50 large multinationals setting standards and conditions for their workers around the world. Global Union monitors the respect of those “contracts” by signatories and publicises their progress (in particular the lack thereof) on its website, resorting to a naming and shaming strategy. The content of the agreements with different firms varies, but also draws upon some of the ILO core conventions.

ISO has not remained inactive, either, with the development of a social responsibility standard in 2010 (ISO 26000:2010). Unlike other ISO standards, it does not lead to certification but aims at helping public and private organisations take action toward social responsibility. It has been developed by a larger group of stakeholders than other ISO standards, including representatives from labour unions and consumers.

Firms have also taken individual action to demonstrate their corporate social responsibility either along existing international instruments or with specific initiatives.

Last and not least, states have re-taken a more prominent role through the inclusion of some core labour standards in the writing of bilateral free-trade agreements (FTA). Most notably, any FTA signed and ratified by the USA includes an obligation for signatories to develop social legislation in conformity with the core ILO conventions ratified by the USA. Short of serious efforts by the US partners to do so, the benefits of the free trade agreement can be suspended or limited, as a way to enforce compliance with labour standards. A recent target of US action has been Guatemala in the context of CAFTA-DR, the agreement between the US and Central American countries.

In sum, the example of international labour standards stands in stark contrast to the previous case of food and trade in two respects. First, it shows a much more permissive way to blend different legal instruments, without the imposition of one central, authoritative, way to proceed. Second, it relies to a much greater extent on soft law instruments, directly targeting firms rather than aiming at state legislation.